Environmental Strategist, between the lines: As the research below points out, big business is better understanding that proactively managing their environmental exposures will increase profits while better competing in today’s business environment.
The bottom line, without our environment nothing else matters or should I say exists. We can’t control natural disasters and the size of your business does not matter because natural disaster occur all over the world. Since our environment impacts everything, logic tells us businesses proactively managing the environmental exposures impacting their operations are going to better compete.
The first step for any business in better managing and transferring their environmental exposures is www.estrategist.com. The computer industry created demand for IT professionals and today’s business environment is creating demand for environmental Strategist™.
Drought, Hurricane Bigger Threat to World’s Top Companies
Bloomberg News Service – MAY 16, 2014
Drought, hurricanes and rising seas are becoming more significant threats to the world’s biggest companies and the risk is accelerating, according to the Carbon Disclosure Project.
Companies planning for various threats related to climate change say they’re grappling now with about 45 percent of the potential risks, or will be within five years, according to a report issued today by the London-based non-profit group. That’s up from 2011, when members of the Standard and Poor’s 500 Index expected 26 percent of the potential risks to affect them within five years.
The results show that climate change is having a measurable impact on business operations, and that many companies expect it to increase costs or hinder sales.
“Significant costs are already being incurred,” Tom Carnac, president of CDP North America, said in a phone interview yesterday. “It’s not just about making plans for the future, it’s about having to change what they do today.”
About 60 companies disclosed risks resulting from the planet’s rapidly changing environment. These included buildings destroyed by hurricanes, rising costs for raw materials, increasing insurance premium, slowing demand for cold-weather clothing and higher winter heating expenses.
Hewlett-Packard Co. (HPQ) said sales slipped as much as 7 percent after floods in Thailand in 2011 led to a shortage in disc-drive components.
Waste Management Inc. said both flooding and drought affect the rate of organic decay at landfills, driving up the cost of collecting landfill gas.
Operational Threats
The companies said that 68 percent of the potential risks would directly affect their operations, up from 51 percent in 2011. About 22 percent of the threats were to their supply chains and nine percent would impact clients.
The report highlighted how different companies’ operations are intertwined. For example, revenue at Union Pacific Corp. (UNP), the largest U.S. railroad, slowed in 2012 as the worst drought in more than 50 years drove down corn shipments by 11 percent.
“This is a great example of how our economy has become so complicated, how a change in agricultural yield affects the revenue achieved by a railroad,” Carnac said.
Union Pacific is reducing emissions by improving fuel efficiency, using more locomotives and improving the aerodynamics of train cars, Tom Lange, a company spokesman, said yesterday.
“We put a lot of energy into how we get better fuel efficiency,” Lange said. “It’s about finding the base hits of fuel technology — there aren’t any home runs. We’re trying to hit a bunch of singles, add a couple percentage points here, a couple percentage points there.”
The report was funded in part by Bloomberg Philanthropies, formed by Michael Bloomberg, majority owner of Bloomberg LP.
environmental Strategist™, between the lines: Historically, real estate developers have not factored in environmental exposures in their business models and it has caused for a multitude of real estate development failures. Regardless of whether the economic collapse in 2008 was at fault or not is not the point. This article gives a very good overview of why businesses are moving away from being litigious to developing and executing an environmental Management Strategy (eMS). (For more on developing and executing an eMS go to www.estrategist.com)
What we have learned with being litigious is it can stress time and resources and rarely are the desired outcomes achieved. Isn’t that a Beach!!!!!
With an eMS you understand, budget for and use sustainability to leverage your business while virtually eliminating litigation from your business model.
eS, eMS: Since every business is impacted by environmental exposures and the fact that the United States has hundreds of millions of acres of contaminated land, sustainable businesses use this to a competitive advantage.
A simple example are brownfields (for more on Brownfields go to www.estrategist.com). Let me digress, if a business uses a vendor to manufacture a product at the end of the day they lose partial control of product quality and they show an expense for using a vendor. With a Brownfield, in many cases you have a physical plant in which you can get grants and tax breaks to clean up and rehabilitate while maintaining 100% control of product quality, creating more jobs, increasing the tax base and at the end of the day you have an asset versus a cost of doing business.
Myrtle Beach groundwater pollution trial headed back to court
Publication Date
07/20/2013
Source:
Sun News (Myrtle Beach, SC)
July 19–MYRTLE BEACH — A pollution trial that was sidetracked last year by a lack of jurors is scheduled to start Monday in Conway with would-be condominium developers JDS Development of Myrtle Beach Inc. blaming the failure of their project on groundwater contamination caused by electronics manufacturer AVX Corp.
David and Steve Nance, partners in JDS Development, claim groundwater containing trichloroethylene, or TCE, migrated from the AVX site along 17th Avenue South to their property, causing their bank to withdraw a construction loan for their planned Southern Pines condo project at the intersection with Beaver Road.
AVX denies the allegations and is expected to argue that the real estate collapse — not polluted groundwater — caused the project’s demise.
The case — originally filed in January 2008 — was supposed to go to trial last year, but only 20 potential jurors showed up during the first day of jury selection and the trial had to be delayed. Judge Benjamin Culbertson has said at least 200 people will be summoned this time to provide a sufficient jury pool.
In addition, AVX has filed more than a dozen pre-trial motions that will have to be heard before the trial begins. Most of those motions seek to have certain evidence and testimony excluded from the trial. For example, AVX previously asked Culbertson to bar any references to TCE’s health hazards, claiming such references are irrelevant to the property damages claim and are only an attempt to scare jurors. Culbertson took that request under advisement last year.
TCE, an industrial degreaser commonly used by the military and others decades ago, can cause cancer after long-term exposure. State regulators do not consider the pollution near AVX to be a health hazard because the groundwater there is not used for drinking water.
The Nances have said they had all the permits and financing in place for their condo project by September 2007, but their construction loan was canceled once the contamination was made public through a series of reports in The Sun News.
When the contamination was publicized, the developers “lost all financing for the project and could no longer market the [condos] to prospective buyers,” according to court documents.
The Nances want AVX to pay an unspecified amount for damages to their 4.4-acre parcel and for the loss of income that would have been generated by the condo sales. The developers had been marketing the condos at prices starting at $180,000.
AVX has said the groundwater pollution does not hinder development and points to the nearby The Market Common project — where homes, restaurants and shops have been built on former military property polluted with TCE and other contaminants — as evidence. AVX also says the pollution has not permanently damaged property values because the company is cleaning up the groundwater to meet federal standards, a process that should be finished within five years. The Nances’ lawyers dispute that timeframe.
This is the second of three civil lawsuits filed over pollution generated at the AVX site.
AVX in 2011 settled a similar pollution lawsuit filed by Horry Land Co. — which owned property across the street from the manufacturer — just as a federal jury trial in Florence was entering its fourth day. AVX agreed to purchase Horry Land’s 21.5-acre parcel after testimony and trial documents showed the company knew about the pollution since at least 1981 but did not try to stop its migration and did not inform adjoining land owners, city, state or federal officials about the problem.
A class-action lawsuit filed on behalf of property owners near the AVX facility is pending and no trial date has been scheduled.
Horry Land discovered the groundwater contamination in July 2006, when environmental tests performed in advance of planned development showed TCE levels of up to 18,200 parts per billion in the groundwater. The maximum amount allowed by the U.S. Environmental Protection Agency is five parts per billion.
In response to our articlelast week on Environmental Insurance as an Investment. we received tremendous feedback. Thank you everyone who joined in on the conversation. Here is one of the many responses/questions we received. We thought this was well worth sharing along with our response. Thanks for reading and please keep the questions and comments flowing!
I believe you make excellent sales points. The client still needs to realize the actual cost of Environmental Insurance vs. the size of the jobs available that require it. I also agree that it’s a nice “value add” when bidding on jobs that do not require it, but it would be hard to measure how often that puts you over the top. How does the cost break out for Environmental Insurance?
Environmental Risk Managers Response (by Parker Bunbury) –Great points and thank you for the feedback. Minimum premiums for CPL coverage with $1MM limits start at just $2,500 for both annual and project specific policies. Premiums are rated off of revenues and the type of work being done. The premium for a pollution liability insurance policy versus the policies face value costs the insured fractions of a cent on the dollar.
A situation that I come across too frequently is contractors being reactive with their environmental coverage’s as opposed to proactive, resulting in increased costs for the contractor. Many times by going with an annual policy instead of project specific policies we are able to cut costs substantially for the contractor. Also, while only some of their jobs require coverage, the insured is faced with numerous exposures and potential environmental losses on a daily basis in all of their work (see www.estrategist.com or our ERA for Contractors for more information)
As you eluded to, contractors are finding CPL coverage requirements in SOME of the contracts they win (This is a trend that is becoming standard practice and only increasing in it’s application nationwide). As a result, when a contractor wins a job requiring CPL coverage they tend to have their agent get them a “Project Specific Policy” for that job. Minimum premiums as I mentioned earlier are $2,500 for $1MM limits, whether the coverage is project specific or annual. Each job the contractor wins that requires coverage, they are getting another “Project Specific Policy” to meet contractual requirements for coverage. If the contractor took a proactive approach there is potential for the contractor to realize substantial savings in terms of premium.
Here’s a simple example – let’s say a contractor doing $5MM in revenue annually wins 4 contracts annually that require CPL coverage. That’s 4 “Project Specific Policies” at $1m limits, $2,500 a piece if the contractor handles coverage re-actively which results in $10,000 in premium. Interestingly, if the contractor was proactive about their environmental coverage’s, and purchased an annual policy that would cover them for all of their work, they would be paying around $5,000 in premium. In this particular instance, a savings of over 50%. Obviously there are variables involved and each contractor is unique, but my point is when insureds are proactive about their environmental exposures and managing them, there is the opportunity for them to save money while gaining value. The value provided by having coverage in place for all of their work is an essential need for the majority of businesses in our country, as the average environmental loss would put most small businesses out of business. With 98% of U.S. businesses being small businesses (100 employees of less).
In an effort to educate businesses and risk management professionals on environmental exposures and management strategies. We have created educational, open dialogue forums on the social media platforms Facebook and Linkedin. We will be sharing our knowledge, relevant news, changes in the insurance market place, and general discussion topics surrounding environmentally related impacts on business and the economy. We encourage you to join in on the conversation, ask questions, share your thoughts and ideas. Join the conversation today!
environmental Strategist™, between the lines: $81,000,000 environmental penalty and a total of $110,000,000 being paid by Wal-Mart to “resolve cases alleging violations of federal and state environmental laws.” That is some serious cash, must be some serious violations, or at least that is probably going to be the view of the general public.
Wal-Mart will survive this reputational risk but what damage has it done and what if it were the other way around?
What if Wal-Mart attracted customers by assisting the local communities in which they operate to make it an environmentally better place to live? Better protecting human health and the environment would build a stronger customer base than being viewed as an illegal disposer of waste polluting the local communities in which they operate to increase profits and competitiveness against small locally owned businesses.
Illegal disposal of waste is atens of billions of dollars a year industry in the United States!
To be environmentally proactive and make where you work a better place to live, go to www.estrategist.com.
This is something every business needs to consider. How are you impacting the environment? Could you be subject to fines and penalties for your impacts?
FOR IMMEDIATE RELEASE
May 28, 2013 Wal-Mart Pleads Guilty To Federal Environmental Crimes And Civil Violations And Will Pay More Than $81 Million
Retailer admits violating criminal and civil laws designed to protect water quality and to ensure proper handling of hazardous wastes and pesticides
WASHINGTON – Wal-Mart Stores Inc. pleaded guilty today in cases filed by federal prosecutors in Los Angeles and San Francisco to six counts of violating the Clean Water Act by illegally handling and disposing of hazardous materials at its retail stores across the United States. The Bentonville, Ark.-based company also pleaded guilty today in Kansas City, Mo., to violating the Federal Insecticide, Fungicide and Rodenticide Act (FIFRA) by failing to properly handle pesticides that had been returned by customers at its stores across the country.
As a result of the three criminal cases brought by the Justice Department, as well as a related civil case filed by the U.S. Environmental Protection Agency (EPA), Wal-Mart will pay approximately $81.6 million for its unlawful conduct. Coupled with previous actions brought by the states of California and Missouri for the same conduct, Wal-Mart will pay a combined total of more than $110 million to resolve cases alleging violations of federal and state environmental laws.
According to documents filed in U.S. District Court in San Francisco, from a date unknown until January 2006, Wal-Mart did not have a program in place and failed to train its employees on proper hazardous waste management and disposal practices at the store level. As a result, hazardous wastes were either discarded improperly at the store level – including being put into municipal trash bins or, if a liquid, poured into the local sewer system – or they were improperly transported without proper safety documentation to one of six product return centers located throughout the United States.
“By improperly handling hazardous waste, pesticides and other materials in violation of federal laws, Wal-Mart put the public and the environment at risk and gained an unfair economic advantage over other companies,” said Ignacia S. Moreno, Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division. “Today, Wal-Mart acknowledged responsibility for violations of federal laws and will pay significant fines and penalties, which will, in part, fund important environmental projects in the communities impacted by the violations and help prevent future harm to the environment.”
“As one of the largest retailers in the United States, Wal-Mart is responsible not only for the stock on its shelves, but also for the significant amount of hazardous materials that result from damaged products returned by customers,” said Melinda Haag, U.S. Attorney for the Northern District of California. “The crimes in these cases stem from Wal-Mart’s failure to comply with the regulations designed to ensure the proper handling, storage, and disposal of those hazardous materials and waste. With its guilty plea today, Wal-Mart is in a position to be an industry leader by ensuring that not only Wal-Mart, but all retail stores properly handle their waste.”
“This tough financial penalty holds Wal-Mart accountable for its reckless and illegal business practices that threatened both the public and the environment,” said Tammy Dickinson, U.S. Attorney for the Western District of Missouri. “Truckloads of hazardous products, including more than 2 million pounds of pesticides, were improperly handled under Wal-Mart’s contract. Today’s criminal fine should send a message to companies of all sizes that they will be held accountable to follow federal environmental laws. Additionally, Wal-Mart’s community service payment will fund important environmental projects in Missouri to help prevent such abuses in the future.”
Wal-Mart owns more than 4,000 stores nationwide that sell thousands of products which are flammable, corrosive, reactive, toxic or otherwise hazardous under federal law. The products that contain hazardous materials include pesticides, solvents, detergents, paints, aerosols and cleaners. Once discarded, these products are considered hazardous waste under federal law.
Pursuant to the plea agreement filed in Missouri and accepted today by U.S. District Judge John T. Maughmer, Wal-Mart agreed to pay a criminal fine of $11 million and to pay another $3 million to the Missouri Department of Natural Resources, which will go to that agency’s Hazardous Waste Program and will be used to fund further inspections and education on pesticide regulations for regulators, the regulated community and the public. In addition, Wal-Mart has already spent more than $3.4 million to properly remove and dispose of all hazardous material from Greenleaf’s facility.
In conjunction with today’s guilty pleas in the three criminal cases, Wal-Mart has agreed to pay a $7.628 million civil penalty that will resolve civil violations of FIFRA and Resource Conservation and Recovery Act (RCRA). In addition to the civil penalties, Wal-Mart is required to implement a comprehensive, nationwide environmental compliance agreement to manage hazardous waste generated at its stores. The agreement includes requirements to ensure adequate environmental personnel and training at all levels of the company, proper identification and management of hazardous wastes, and the development and implementation of Environmental Management Systems at its stores and return centers. Compliance with this agreement is a condition of probation imposed in the criminal cases.
The criminal cases announced today are a result of investigations conducted by the FBI and the EPA, which received substantial assistance from the California Department of Substance and Toxics Control, and the Missouri Department of Natural Resources.
In Missouri, the case was prosecuted by Deputy U.S. Attorney Gene Porter and ENRD Senior Trial Attorney Jennifer Whitfield of the Environmental Crimes Section of the Environment and Natural Resources Division. In California, the cases were prosecuted in Los Angeles by Assistant U.S. Attorney Joseph O. Johns and in San Francisco by Assistant U.S. Attorney Stacey Geis.
